Fleet Management

Fleet Management Blog

Reduced Pricing on New Vehicles for Fleets

Posted by Brad Forbush on Mar 10, 2022 7:00:00 AM

Male hand holding car keys offering new blue car on background

As I’m sure you’ve either read or heard about in the news, the entire U.S. business economy continues to be negatively impacted by major disruptions in our product supply chain, and the auto industry is being affected by a shortage of semi-conductor computer chips, which are used to operate each vehicle’s onboard computer system. You might be surprised to know that a basic car like the Ford Focus has as many as 300 chips, and a fully electric vehicle has as many as 3,000 chips . . . today’s new cars are truly computers on wheels! The net result is that retail auto dealers currently have a small fraction of the inventory they would otherwise have in normal times, and they’re responding to this short supply by charging higher prices; MSRP (window sticker) is now the standard asking price throughout the U.S., and dealers are charging well over the MSRP in the largest metro areas. Industry experts predict that conditions will worsen before they begin to improve toward the end of 2022, and some experts predict that it will be 2023 before the supply of vehicles in the U.S. begins returning to normal levels.

This all adds up to retail consumers having to settle for paying higher prices, and waiting, sometimes for months, to purchase vehicles that may not even have their choice of color or equipment. Fortunately, there is some good news for our clients who have direct access through Caritas to the auto manufacturer’s wholesale fleet channel to acquire new vehicles. We’re not limited to making retail purchases from auto dealers, so we’re able to help you avoid the scenario described above by placing factory fleet orders, which essentially guarantees you will receive vehicles equipped to your specific requirements, with full fleet discounts based on the Caritas pre-set pricing formula. As always, the cost to purchase a fleet-ordered vehicle will be the same whether it’s for a driver in Seattle, Miami, or anywhere in-between. Here are a few recommendations to assist in your fleet planning:

Plan ahead: Depending on the particular make and model, a fleet ordered vehicle takes anywhere from two to four months from the time it’s ordered to delivery. Vehicles built in the U.S. have much shorter cycle times than those built overseas, so it’s best to plan for the number of vehicles that need to be replaced over the next 12 – 18 months, and to forecast a budget accordingly.

Replace the right vehicles at the right time: Start by reviewing vehicle age and mileage; vehicles that are eight years old or older, and have 100k miles or higher have outdated safety technology and the highest risk of expensive mechanical repairs. The best time to replace an older vehicle is when it’s still in good mechanical condition, and today’s used car prices have reached historic highs.

Here are some examples of vehicles we recently sold at auction:

Sale Prices blog article

As you can see, replacing an older vehicle when it’s still in good condition brings high returns in today’s market, however, the value of any of these cars could easily have dropped by 50% had someone waited until a serious mechanical problem occurred before deciding on replacement.

Do the math: Right now, the higher returns of old cars in good condition combined with the factory discounts for a new 2022 fleet ordered vehicle can easily add up to a $4,000 - $5,000 savings to your Congregation on replacing just one old vehicle in your fleet.

Overall, using the benefits of using your fleet program to factory order new vehicles provides your community with three important outcomes:

1. Greater peace-of-mind in knowing Sisters are driving vehicles with the latest safety technology.

2. More convenience from having new vehicles equipped the right way, and delivered where and when you need them.

3. Good stewardship of resources from paying less for new vehicles and selling your old cars for higher prices. Not bad considering this is one of the most difficult times ever in the auto industry, and the average consumer is finding it next to impossible to buy a new car at a good price without a hassle! I hope this information is helpful, and please don’t hesitate to contact me with any questions or if you would like me to provide more details.

Thank you for your time, and feel free to Contact Us with any inquiries!


Topics: Fleet Management Best Practices

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